I care , I would love to know how he did it.
is it justified for me to concern about broker reverse engineering my strategy?
- Thread starter trend2009
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It is if you consider the 10,000 trades, if of similar size it means it wasn't luck , and 130% from mid march is a fantastic return .
What worries me is the very tiny average profit per trade. The smallest change in the market can cost him much more than 0.013%.
0.013% is 13 cents on a $1,000 stock. It's nothing. If he would make $10 it would be less risky. He is constantly trading on the border between profit and loss. And where are the stops placed? His stop on a $1,000 should be at least a few dollars. Compare that stop with the $0.13 profit per share. He should have a very high winning rate.
Sounds like HFT trading.
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Yep - but a couple of assumptions. Going from 10K to 23k isn't the same as 10MM to 23MM and thus will fly under the radar. In addition, few employees I would assume have access to the data so there would have to be one rogue employee out of many doing this so he can then do it on his own where presumably his trades are required to be reported to his employer for review (and probably is highly restricted on when he can trade). If at the firm level, I pull back to the word REPUTABLE. I'd bet my bottom dollar that Schwab, TD, IB, Fidelity, ETRD and the like would ever consider this. I do not think they trade prop but certainly wouldn't risk the reputation and legal risk involved of effectively stealing a clients also. Maybe I'm just naive.
All true ,( apart from stops, I suspect he has that sort of optimised) , but , if it lasted even a couple of years his compounded return is huge , though perhaps liquidity would limit size as he says it's in a thin market, but what he finds a broker who might offer him cheaper commission? (10,000) trades is a fair bit in commission. Like you say a small change in circumstances could cost him dearly , or make him a lot more , could go either way. ( meant in reply to virtusa)
Trust me your naive , it's not about the details , the rules , the reputation , it's about human nature , male aggressive ambitious human nature.( Not all guys at Schwab are like that , but there will be plenty who are).
Exactly. There's money to be made. This idea that some lowly CS staff will care about reputations that much is silly.
I wonder how many people here ever worked or where on a regular basis in these brokerages. Because if you were not, you would never be able to proof it happened. Even the large majority of people who work there would even not notice it happen. How can you then as an outsider be sure it never happens?
You should know the procedures and the potential weak points in the IT system.
I am sure it happens as I saw it happen one time in 1995.
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Just the way of the world my friend , like you say, you live and learn , all sorts of "stuff "happens , if there's money in it sooner or later someone will try and take it.
I myself received a detailed trading reports of a consistently profitable trader leaked from a brokerage firm. the reported was sent to me by a trader friend asking if I could crack it.